Supreme Court Health Care Decision: When A Tax Is Not A Tax

"It is of course true that the Act describes the payment as a 'penalty,' not a 'tax.' But while that label is fatal to the application of the Anti-Injunction Act, it does not determine whether the payment may be viewed as an exercise of Congress's taxing power."

Let's explain: The court was facing two distinct questions. First it had to decide whether it could even hear this case at all. Under the Anti-Injunction Act, the court is precluded from ruling on a case before a tax goes into effect. So, if the individual mandate was a "tax," then the court could not take up the case.

As we've told you, the court's majority decided the individual mandate was constitutional because it fell under Congress' taxing authority. In other words, because the individual mandate was a tax.

So in those two sentences above, Chief Justice John Roberts is saying that for constitutional purposes the individual mandate is a tax. But for the purpose of the Anti-Injunction Act, it is not a tax.

How can that be?

The chief justice gives a pretty thorough explanation in pages 12 and 13 of the majority opinion. Essentially, Roberts is using two separate tests to arrive at his conclusions.

"At first glance, the idea of using two tests to answer the same question – 'Is this a tax?' – is counterintuitive. But Chief Justice Roberts' opinion explains the reason for the distinction: the Constitution imposes limits upon the Congress, and it would undermine those limits if Congress could circumvent them merely by altering the label on a piece of legislation. That is why for purposes of determining the scope of the taxing power, the label does not matter. However, the AIA is Congressional policy, and so the key question in that context is whether Congress intended for that policy to apply in a particular case. If Congress wants the AIA to apply, it knows to use language echoing that statute. Similarly, if Congress does not want the AIA to apply, it will use different language, and courts should respect that judgment."

In the case of the individual mandate, Congress chose to call it a "penalty," so the court should assume Congress did not intend for the AIA to apply.

Roberts uses two concrete examples to explain his reasoning.

First on the constitutional front he writes: "Congress may not, for example, expand its power under the Taxing Clause, or escape the Double Jeopardy Clause's constraint on criminal sanctions, by labeling a severe financial punishment a 'tax.'"

On the AIA front, he writes that the court has applied the Anti-Injunction Act "to statutorily described 'taxes' even where that label was inaccurate."

Roberts wraps up those two thoughts like this:

"It is up to Congress whether to apply the Anti-Injunction Act to any particular statute, so it makes sense to be guided by Congress's choice of label on that question. That choice does not, however, control whether an exaction is within Congress's constitutional power to tax."

SCOTUSBlog's Tejinder Singh seems to think that this opinion by Roberts means that from here on out the test on whether a tax is tax as it relates to the Anti-Injunction Act will be whether it's labeled as such by Congress.